Tims says mending fences with franchisees paying off
Sales in Canada on upward trend in latest results
The parent company of Tim Hortons saw sales growth at Canadian locations of the coffee-and-doughnut chain as executives say their work to mend fraught franchisee relations is paying off, though more work remains. Restaurant Brands International Inc. is pleased with the Canadian results, said CEO Daniel Schwartz in an interview with The Canadian Press.
Sales at Tim Hortons restaurants in Canada open for 13 months or more, a key retail metric, increased 0.9 per cent in the quarter ending Sept. 30, according to the company’s third-quarter earnings report. That’s up from 0.6 per cent in the same quarter the previous year and outpaces the systemwide growth of 0.6 per cent, which includes restaurants outside of Canada, for the current quarter.
Executive changes, including hiring Duncan Fulton as chief corporate officer in July, and initiatives from the company’s “Winning Together” brand plan helped, said Schwartz.
He highlighted the launch of all-day breakfast nationwide in late July as adding incremental sales and profitability.
The plan also includes renovating restaurants — a $700-million investment that adds open-concept seating. The company has completed about 100 renovations to date, and plans to do hundreds more in the fourth quarter.
“These improved results don’t even reflect several of the initiatives that we have not yet launched,” he said.
Tim Hortons will add a kids’ menu this quarter, he said.
The company also plans to launch a loyalty program nationwide sometime in the first half of 2019, said Tim Hortons president Alex Macedo.
The program, dubbed coffee pass, is already being tested in two cities and the trial will expand to several others.
Self-service kiosks, which are already present at some locations in and around the Greater Toronto Area, will start to roll out more broadly early next year, he said.
The chain has grappled with an unsanctioned group of franchisees who formed the Great White North Franchisee Association in an effort to remedy alleged mismanagement of the brand. The group has claimed to represent more than half of Canadian Tim Hortons franchisees and launched multiple lawsuits against RBI, its subsidiaries and several executives. RBI also launched its own lawsuits against the group and some of its members.
Sales at the company’s other two chains, Burger King and Popeyes Louisiana Kitchen, also grew, lifting RBI’s third-quarter profit.
The company’s profit attributable to shareholders totalled US$133.6 million or 53 cents per diluted share, up from $91.4 million or 37 cents per diluted share a year ago. The Oakville, Ont.,based company keeps its books in U.S. dollars.
Revenue totalled $1.38 billion, up from $1.21 billion in the same quarter last year.
On an adjusted basis, RBI earned 63 cents per diluted share for the quarter, compared to 58 cents per diluted share a year ago.
Analysts expected a profit of 65 cents per share, according to Thomson Reuters Eikon.